Auditors also concluded “some trends in CNA reserve data, as well as its most recent loss and premium reports, raise questions about actual loss experience’’ that Pentagon-paid premiums were based on.
The review is the latest report to illuminate the workings and alleged deficiencies - such as excessive premiums and late or non-payments to survivors - of a little-known system intended to pay death and injury benefits to war-zone workers. These issues have been raised in reporting by the Army Audit Agency, the Government Accountability Office, and the ProPublica nonprofit news group.
US and foreign contractors, under the 1941 Defense Base Act, are required to take out death and injury insurance for all US employees and subcontractors doing business overseas.
The government reimburses companies for the premiums. In many cases, if the injury or death is war-related, insurers also will be reimbursed as well for the full cost of benefits, plus 15 percent in administrative fees.
The Pentagon and the Labor Department are both responsible for overseeing the war insurance program that has seen claims surge since the invasions of Afghanistan and Iraq. As of December, the number of Defense Base Act cases in Afghanistan had reached 10,600.
The number of Defense Base Act cases paid worldwide have climbed to 14,863 in 2009 from 309 in 2000, according to Labor Department figures cited by Richardson.
The audit focused on payments to Continental Insurance Co. between 2006 and 2009 when it received $225 million in premiums.
CNA spokeswoman Katrina Parker said in an e-mail “the program was appropriately priced and CNA acted transparently and in good faith in our dealings with the Corps.’’ Bloomberg provided CNA portions of the report.
“CNA did not receive any premiums in excess of amounts to which it was entitled under the contract,’’ she said.
